GoldToken - Bitcoin Sidechain By CoinShares Digital Asset Manager

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The majority of digital assets falls into three, yet not entirely exclusive, categories:

• Crypto-currency: a digital form of currency whose value gets derived through speculation. It would get considered by authorities like the SEC as a security. Especially if used for fundraising purposes.

• Utility: a token used as payment for services on a specific blockchain. Partly, their values get derived from the popularity of the platform they get offered.

• Stablecoin: a digital asset which

A GoldToken (DGLD) is a gold-pegged digital asset. Backed by the eponymous precious metal. Each DGLD = 1 gold bar. It got created by a consortium of reputable businesses in the crypto market. Using the name of ‘Gold Token S.A’ and fell into the latter of these three categories.

With this article, we aim to conclude the value and necessity of purpose for this DGLD token.

What is GoldToken (DGLD)?

GoldToken (DGLD) is a digital asset. Serving as “proof of ownership” for possession of investment-grade gold. which get alleged, “held in a vault in Switzerland.”

Marketing materials from the group claim that DGLD is “the most independent way to hold gold”.

“the benefits of a safe-haven asset. And serves as a hedge against both inflation and financial instability. But it does all this in a disintermediated format that is mobile, liquid and secure.”

DGLD blockchain gets linked to the Bitcoin blockchain via CommerceBlock’s Mainstay protocol. CommerceBlock serves as a key strategic partner on the project. Enabling immutable & direct user-to-network transactions without passing through a third party.

Upon launch (December 2019), the token was only available on ‘The PIT’ exchange. Owned and run by Blockchain.com. And got rebranded to Blockchain Exchange. It must also get noted that “GTSA accrues a fee that amounts to 1% of the GoldToken per year. GTSA receives this fee in the form of new DGLD issued”.

Why GoldToken, Why a virtual currency?

There are a few reasons why an investor may choose gold over other assets and commodities.

#1: Investors in gold enjoy far lower volatility (in the long term). When compared to digital assets, or even stocks

• This stability might be an attractive feature to many seeking a secure investment. Combined with a high demand for gold and limited supply. Especially in times of uncertainty in fiat, like the present. Thus, it is also a strong, hedging asset.

• But, gold is far less valuable for those seeking to invest in dramatic long. Or short sell positions (speculative trading).

#2: High liquidity

• High demand (and historical value). Means that there is always a bevvy of options available for exchange—almost all times.

When considering the relationship between gold and cryptocurrency. We can consider gold-pegged (and/or backed) assets to be stablecoins. More stable than those pegged to (non-physically-backed) fiat at times.

According to a report published by news.bitcoin.com in late January 2020. There are currently over 77 digital currencies projects. Claiming to remain backed by physical gold. Even notorious stable token team Tether. Prior scandals allegedly false claims of physical backing for their USD-backed token (USDT). Has entered the gold-pegged stablecoin arena with Tether Gold (XAUT).

Unlike Tether a GoldToken: DGLD benefits from backing from several reputable organizations in varying related sectors, including long-established names in precious metals (MKS PAMP Group).

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